Dive Brief:
- Publix has reported Q3 sales of $8.8 billion, an increase of 3.2% from the same period a year ago, while comparable store sales increased 0.6%, according to a company press release. The company estimates that this quarter’s sales could have been about 3.1% higher without the impact of Hurricane Irma in Q3 2017, which boosted last year’s sales, while store sales could have increased 3.7%.
- Net earnings for Q3 increased 42.7% from 2017, reaching $677.7 million. Earnings per share reached $0.94, up from $0.63 per share last year, in large part because of the Tax Act, which decreased the federal statutory income tax rate from 35% to 21% in 2018. Publix also credits new accounting standards for equity securities for its positive impact on earnings.
- “In the last six weeks, many of our associates and customers have faced difficult times with Hurricanes Florence and Michael. I’m proud of our associates for their extra efforts and pleased with our team’s results,” said Publix CEO & President Todd Jones in a press release.
Dive Insight:
Publix is heading into Q4 in a strong position, and it's realizing the positive impact of corporate tax cuts from the Tax Act, formally known as the Tax Cuts and Jobs Act, which was signed into law last December and promised major tax reform for individuals, businesses and corporations. Most notably for corporations, the law put into place a single corporate tax rate of 21% and repealed the corporate alternative minimum tax.
The Tax Act was widely welcomed in the grocery industry, and clearly Publix is one grocer seeing the benefits of this slashed tax rate. Other grocers are, too. Sprouts released its Q3 earnings yesterday as well, and attributed increased earnings and income to the Tax Act. A few months ago, Kroger reported that it was using some of its tax saving to invest in employees. For many grocers, savings from the Tax Act are likely to help improve operations, allow for further investment in wages and benefits for employees, and strengthen their bottom lines.
As a grocer operating throughout much of the southeastern U.S., hurricane activity continues to impact earnings for Publix, as well. Last year, Hurricane Irma led to a major sales boost in Q3 as customers stocked up on supplies before and after the storm, but this year Hurricanes Florence and Michael did not produce the same sales increase – possibly due to a combination of store closures and the fact that the storms were smaller and didn’t generate as much emergency demand for goods.
Outside of Q3 earnings, Publix is looking strong. In addition to some significant changes at the executive level, which appear to be positive, Publix also plans to expand its headquarters and add hundreds of jobs in the coming years. Publix is also hoping for success with the opening of its GreenWise Market concept, though there is less certainty with the banner as Publix tries to draw millennials as a new customer base.
Publix continues to operate as a steady player in the grocery market, showing both a commitment to its traditional operations and customer base as well as an eye toward the future of e-commerce, innovative store concepts and new talent.
